On the 29th May 2020, Rishi Sunak (Chancellor of the Exchequer) laid out government plans to extend the Self-Employment Support Scheme as well as confirming the next steps in the evolution of the Job Retention Scheme which is currently supporting around 8.4 million employees across the country.
Job Retention Scheme Timeline
The changes hinted at in mid-May and as discussed in our recent update, have now been fleshed out with more detail as summarised below- critically, employees will continue to receive 80% of their salaries (capped at £2,500) throughout the scheme as the changes apply only to the contributions made by employers:
- 10th June: Staff must be furloughed by this date to be included in the scheme beyond the 30th June (as they will then have been furloughed for 3 weeks prior to the 30th June cut off)..
- 1st July onwards (JRS v2): The government will continue to pay 80% of wages (capped at £2,500) including NI and Pension contributions as has been the case so far. Brought into effect a month earlier than previously announced, employees can return to the workplace on a part time basis while still being supported by the furlough scheme. Employers will be responsible for paying employees for the hours worked while the government will continue to support them under the furlough scheme for the hours they are still unable to work.
- 1st August onwards: The government will continue to pay 80% of wages (capped at £2,500) but employers will be expected to pay the National Insurance and Pension contributions.
- 1st September onwards: The government will reduce payments to 70% of wages (capped at £2,187.50). Employers will now continue to pay NI and Pension contributions as well as 10% of wages to ensure employees continue to receive 80% of their salaries to a cap of £2,500.
- 1st October onwards: The government will further reduce payments to 60% of wages (capped at £1,875). Employers will continue to pay NI and Pension contributions as well as 20% of wages to ensure employees continue to receive 80% of their salaries to a cap of £2,500.
The scheme will be brought to a close at the end of October 2020.
The Chancellor said “Now, as we begin to re-open our country and kickstart our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining amongst the most generous in the world”
Self-Employment Income Support Scheme
The Chancellor also set out what’s in store for the self-employed- he confirmed that those applying for the first wave of taxable grants can still do so until the 13th July 2020.
- The first grant will be worth 80% of the individual’s average monthly trading profits, paid as a single installment covering 3 month’s worth of profits (capped at £7,500). Once applied for, the grant should be in your bank account within 6 working days.
- The second wave of grants will be open for applications in August and will be worth 70% of the individual’s average monthly trading profits, paid as a single installment covering 3 month’s worth of profits (capped at £6,570)
Eligibility for the grants remains the same and applicants will need to be able to show that their business has been adversely affected by the pandemic. You can apply for both grants or just one- you don’t need to have applied for the first wave to apply for the second.
According to the government website, further guidance on the second grant will be published on Friday 12th June.
A word from key stakeholders:
Dame Carolyn Fairbairn, Director-General of Confederation of British Industry (CBI), said: The changes announced will help ensure the schemes stay effective as we begin a cautious recovery. Introducing part-time furloughing…will help employees to return to work gradually and safely. Many more businesses will feel supported during this vital restart phase.
Firms understand the scheme must close to new entrants at some point and that those using it in future will need to make a contribution to help manage the costs. However, previously viable firms not able to open until later, particularly in leisure, hospitality and the creative industries, may need further assistance in the coming months.
Mike Cherry, National Chair of the Federation of Small Businesses (FSB) said: Small firms have long been the backbone of the UK economy and these policies will help keep it that way. Keeping the self-employed and those who work in a small business attached to the labour market is crucial to prevent scarring of the economy – the package today gives certainty and support to millions.
Adam Marshall, Director General of the British Chambers of Commerce (BCC) said: The gradual reduction in furlough contributions from the Treasury will give businesses additional time to rebuild their income streams and cash flows, and the decision to give businesses maximum flexibility to bring people back part-time will be appreciated. The extension of support for the self-employed will come as welcome relief for those who have seen their livelihoods impacted by the virus. It is right that this group continues to receive similar levels of support to those on PAYE.